We’ve all got financial goals, I’m sure. We want something to aspire to, we want a physical number to reach and we want to see ourselves hit these goals we have set. For the majority of us, our goals are long-term: we want to have a certain amount of money saved up for retirement; we want to have our home paid off in 15 years; when our kids grow up we want to be able to pay for their college or university education. But do we have intermediate goals?

Most people plan for the long term, and only the long term, with no thoughts about the in-between. Everybody should have short, medium and long-term goals. Rationally and mentally, this will help you achieve those end goals which you’ve  set for yourself. Consider myself: I’m currently 19 years old. My long-term goals are as such: when I retire, I want to have $3 million in cash to live off of before I die and own at least $4 million worth of real estate which I can sell should I outlive those savings. I won’t be needing those $3 million until I turn 65, which is 46 years away. When I see $500 being put aside every month for my retirement, those $3 million look a very long ways away. Mentally, it’s depressing, and there’s a good chance I would quit after a few years, thinking it was impossible.

This is where intermediate goals come in: I don’t need to worry about the final number, as long as my short term goals are on track.  Starting at $0, after one year I want to have around $6300 (I’m assuming only 5% interest due to the recession). After 2 years, increasing the interest rate 1%, I want to have $13100. After 5 years, I’m looking to have $36919. These numbers are far more real to me when I see the money I’m putting away every month. Mentally, it’s the stimulation to keep me going.

It makes sense from a rational perspective, as well. It’s easy to say you want to have a certain amount of money in x number of years. Short and medium-term goals give you the numbers you need to make sure you reach those goals. The amount you need to put aside every month will give you an idea of whether you’ve bitten off a little bit more than you can chew in the long run, or if you might have underestimated and can afford to put some more money towards your goal.

This applies to all parts of personal finance planning: I’m not going to arbitrarily buy property, I have a plan for it. If you don’t have short and medium-term plans for your financial goals, you need to sit down with a piece of paper and a calculator (or excel, if that’s your thing) and plan it out. Give yourself measurable goals which will show you how you’re doing on the way to reaching your long term goals. You’ll feel better by seeing that you’re at the right pace, and we all feel good when we reach our goals, even the little ones.

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